LONDON (Reuters) - British bank Barclays (BARC.L) is to buy the British credit card assets of online bank Egg from U.S. lender Citigroup (C.N) for an undisclosed price, as part of plans to boost its retail banking business.
Barclays said on Tuesday that Egg’s British credit card assets consisted of 1.15 million accounts with approximately 2.3 billion pounds ($3.75 billion) of gross receivables.
“The acquisition of Egg’s UK credit card accounts has been priced at a significant discount to gross receivables. Based on current projections, we expect the transaction to exceed the financial return targets set out at our recent results announcement,” finance director Chris Lucas said.
Last month, Barclays said it was targeting a return on equity of 13 percent and planned to cut annual costs by 1 billion pounds by 2013.
Barclays will integrate the Egg accounts into its Barclaycard credit card division. It added it expected that the deal would be completed during the first half of this year.
For Citigroup, the disposal of the Egg assets forms part of the American bank’s program of selling non-core businesses after Citi received a huge U.S. government bailout during the credit crisis.
Citi acquired Egg from British insurer Prudential Plc (PRU.L) in 2007 for 575 million pounds and the American bank had been looking to sell Egg for some time.
Citi said the Egg sale was expected to result in an after-tax gain, which would not be material to its net income.
(Reporting by Sudip Kar-Gupta; Editing by Dan Lalor and Louise Heavens)
$1 = 0.6140 pound